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BUENOS AIRES, Argentina (AP) — Bond payoffs are supposed to be
boring, but Argentina's president is celebrating Friday's final
$2.3 billion payment on a bond given to people whose savings were
confiscated a decade ago, calling it a lesson for European
countries now mired in foreign debt.

The nation's economic disaster left thousands with a grim choice
after the government seized their dollar-denominated deposits to
stop bank runs in 2002. They could switch to devalued pesos and
regain access to what was left of their savings, or accept a
piece of paper promising to repay the money in dollars over the
next 10 years.

Few had any faith in the government's promises back then.
Argentina had just defaulted on more than $100 billion in foreign
debt, banks were shuttered, the economy was in ruins and streets
were filled with pot-banging protesters whose chants of "throw
them all out" would send five presidents packing.

But Argentina has mostly paid up after all, making good on 92.4
percent of that defaulted debt so far, including $19.6 billion in
U.S. currency over the years to cancel the Boden 2012 bond. Most
of the hard-luck account-holders later sold the bonds at a loss,
but as the government makes its last $2.3 billion payment on
Friday, the few stalwarts who kept the faith have been made
whole, while earning a modest 28 percent profit over the years.

"It was good business" for anyone who got the bonds early and
held them, said Jorge Oteiza, a bond trader with Banco Comafi in
Argentina. "To have the same buying power you had back then isn't
bad."

President Cristina Fernandez praised her government for meeting
its commitments and blamed multinational financial institutions
for the debt crises that afflicted Argentina back then and
threaten Europe today.

"This is the money that the banks should have returned to the
Argentine citizens," she said during a national address from the
Buenos Aires stock exchange Thursday night. Showing charts and
rattling off numbers, she argued that her government has shown
the world how to emerge from default without imposing austerity
measures, growing its economy and strengthening the social safety
net.

This debt relief "has given us an immense independence from the
activity of the market," she said to applause from the hundreds
of guests she had invited onto the exchange floor.

Argentina's foreign-currency debt has dropped from a daunting 166
percent of GDP at the end of 2002 to a more manageable 42 percent
of GDP at the end of 2011, said Ramiro Castineira of the
Econometrica consulting firm. "If before it was a burden to
shoulder, now it's just a handbag. It doesn't restrict the
economy as it did in the past," he said.

However, the debt has grown in nominal terms during the same
period, from $137 billion to $179 billion.

Many economists suggest the official story is misleading at best,
since the government has refused to pay billions of dollars in
other bad debts while borrowing freely within Argentina, taking
money from pension funds, provinces, state-owned banks and the
central reserve to stimulate the economy and reduce its foreign
debt exposure.

In her determination to make Argentina financially independent,
critics say Fernandez has only shifted the debt burden onto her
citizens, imposing terms that could stunt the country's future
growth. For example, the government promised to pay negative 0.25
percent interest over ten years for the $27.9 billion it took
from the treasury for debt relief, the central bank said.

"It's wonderful to see Argentina pay down debt, but for every
dollar they're paying down, they're borrowing two or three
through the other window, and increasingly from their own
people," said Arturo Porzecanski, an expert on emerging markets
at American University in Washington.

Economy Minister Hernan Lorenzino proudly described the Argentine
recipe in a column Wednesday published by Telam, the government
news agency: Spurn the requirements of the International Monetary
Fund and World Bank. Strong-arm the so-called "vulture
funds" into accepting lower returns on their risky bets.
Nationalize private pension plans, the airline and now the YPF
oil company, putting their assets to use creating jobs. And tap
central bank reserves to pay down international debts.

Frozen out of international markets as a consequence of the 2002
default, this government made breaking their rules a point of
pride, Lorenzino suggested.

"At first, they called us heretics and the international
community turned its back on us," he recalled. But "this
government makes policies today without conceding to
international pressure, thinking first of those on the inside,
and later on those outside."

Lorenzino has said this government will not take on more
international debts. Not that it could: Friday's payoff still
doesn't resolve nearly $7.5 billion it owes the U.S. and other
Paris Club nations, or the $11.2 billion claimed in U.S. courts
by bond holdouts.

Argentina also owes millions in court judgments to U.S.
companies, and Spain's Repsol Group wants $10.5 billion for its
shares in YPF that Fernandez expropriated this year. Many of
these investors would try to seize any newly borrowed money
before it reaches Buenos Aires.

Lorenzino suggested that Argentina's renegade approach makes it
better prepared to confront global crises because the portion of
its debt held by the private sector has dropped from 124 percent
of GDP a decade ago to 14 percent last year. "This was possible
only under the concept of economic independence, political
sovereignty and social justice," Lorenzino wrote.

But this shift from private to public debt means that the
government is essentially borrowing from Argentine taxpayers and
bank account holders to stimulate its economy, at rates far below
inflation, which is estimated at 25 percent a year or more.
Unless this changes soon, the money could run out and there will
be few other places to turn for help.

"This is no longer an 'us-versus-them' problem," Porzecanski
said. "At first they went after the big multinationals, then the
'filthy-rich bondholders,' then powerful institutions like the
IMF. Now it has become a fight for financial resources within
Argentina. That's why I think the end is coming."